CEO pay at region's nonproft service providers

The two brothers who founded Pedia Manor Inc., a Bucks County nonprofit provider of rehabilitation services for children, use an unusual formula to determine their salaries.

According to compensation rules they have written themselves, Sudesh and Dinesh Singh, Pedia Manor's key executives and only board members, are each eligible to receive $12,000 a month for each of five locations the brothers own, Pedia Manor's latest tax return says.

That the Singhs paid themselves only $520,001 each in 2014 - 16 percent of Pedia Manor's revenue - instead of the $720,000 they were entitled to, did nothing to assuage nonprofit expert Laura Otten.

"The most egregious thing in this whole scenario is that the brothers are both the only two board members and the two top employees," said Otten, executive director of the Nonprofit Center at La Salle University.

"They determined their salaries, they wrote the contract as 'their bosses,' and they signed the contract. None of this is anywhere on the best-practices continuum," Otten said.

The Singhs, who get most of their $6.35 million in revenue from Pennsylvania Medicaid and affiliates, did not respond to requests for comment.

Pedia Manor - along with a nonprofit that has paid more than half its revenue over the last decade to for-profit firms owned by the executive director - stood out in an Inquirer survey of CEO pay at more than 90 tax-exempt human-services organizations in the Philadelphia area.

"Best practice is to avoid conflicts of interest by not engaging in any transactions with a board member, officer, or employee," said Laura Solomon, an Ardmore attorney who specializes in tax-exempt organizations.

But more than 20 additional organizations had business dealings with board members, officers, or their family members. Typical transactions involved renting property from insiders or hiring board members' companies for certain services.

The Inquirer looked at human-service groups - nonprofits that provide services for the developmentally, intellectually, and physically disabled; mental health and addiction treatment; and troubled youth.

The analysis was limited to organizations that had headquarters in the eight-county Philadelphia region and at least $5 million in revenue in 2014 or in the year ended June 30, 2015.

All pay is for 2014, the most recent year available in Form 990 tax returns. On average, CEOs were paid 1 percent of revenue.

Topping the list of human-services executives, with total pay of $1.3 million, was Diana Ramsay, who led Woods Resources, of Langhorne, for just four years, a far shorter period than most of the top-paid CEOs.

Placed in the larger universe of executives who run the area's biggest hospitals, Ramsay's pay would have ranked ninth among 21 Philadelphia-area health-system CEOs, putting her between executives running systems with three times and four times more than Woods' $191.5 million in revenue.

Steven M. Altschuler, who left the Children's Hospital of Philadelphia in summer of 2015 after 15 years as CEO, was the highest-paid health-system CEO, with total pay of $4.7 million in 2014.

At Woods, which has operations in Pennsylvania and New Jersey, Ramsay expanded through four acquisitions, nearly doubling the size of Woods. She left Woods four months after her final deal in September 2015. That deal was undone in April.

A spokeswoman for Woods declined to answer questions about Ramsay's compensation, such as whether Ramsay was able to keep retirement funds. Ramsay could not be reached for comment.

The next two highest-paid executives had much longer tenures. M. Joseph Rocks, who led NHS Human Services Inc. for 15 years, was paid $1,060,166.

Close behind was Joanne Gillis-Donovan, of Melmark Inc., in Berwyn, who had total compensation of $944,383 after 20 years at Melmark.

Sometimes salaries and benefits do not tell the whole story, which is the case with the Philadelphia Mental Health Clinic Inc.

The Center City organization, which operates as Philadelphia Mental Health Center and provides mental-health treatment to disabled children and their families, paid its executive director, Kerey Ruggiero, $207,142 in 2014. That is about average.

But the clinic also paid $7.2 million, or 65 percent of its $11.11 million in fiscal 2015 revenue, to for-profit firms Ruggiero owns, plus $400,486 in rent to Ruggiero and her relatives.

During the 10 years ended June 30, 2015, the clinic paid nearly $60 million - more than half of the clinic's revenue - to those firms and landlords.

A federal lawsuit filed in Philadelphia in July by Philadelphia Mental Health Clinic's former chief operating officer - who was fired in February after objecting to the insider deals - alleged that many of the payments to Ruggiero's companies were for unneeded services. Staffing fees by Staffmore LLC, a firm owned by Ruggiero, were allegedly inflated by 25 percent.

Ruggiero, who splits her time between Philadelphia and Florida, did not respond to requests for comment. Nor did her attorney, Brenna D. Kelly, of Saul Ewing LLP, in Philadelphia. The former executive, Caryn Gratz, declined to comment, said her attorney, Noreen Amir, of the Law Office of Guy Vilim LLC, in Media.

Officials at Community Behavioral Health, a quasi-governmental entity that accounts for the bulk of Philadelphia Mental Health Clinic's services, said they could not comment because of the lawsuit, which said officials there were concerned about the amount of money Ruggiero was paying her companies.

Notable about the clinic is that it has a small board, with just three members who do not work at the organization, according to a 2015 licensing application in Pennsylvania.

One lives in Florida, another in Denmark, the third in Newtown.

"Charities are required to have independent boards that include representatives from the communities they serve," Solomon, the attorney, said.

"Often, when there is a misuse of charitable assets, it occurs because the organization lacks an active, engaged, healthy board that's doing its job of providing oversight over the charity, its assets, and operations," she said.

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